Is Global Gold Demand Really Down 1%?

Gold is taking off, so it must be time for some anti-gold propaganda. The primary problem with the WGC’s numbers is that the major media outlets always report them as gospel. But as we have pointed outtime and time again, the WGC’s numbers are almost always drastically under the actual numbers and that for some reason the World Gold Council seems to have an agenda to continually suppress the price and downplay demand– notably Chinese demand.

Actual Chinese Gold Demand

The report states that Chinese gold demand fell to 273 tons, a decline of 7%. But a closer look at the withdrawals on the Shanghai Gold Exchange and you can see that the total amount of gold purchases was 625 tons! Going by the SGE numbers, just like last year, the WGC is undershooting Chinese demand by more than 100%!

Shadow Gold

The WGC even admitted in the fine print of one of their earlier reports that China doesn’t just move gold through the SGE.

There is a large amount of “shadow gold” that enters the country via the black market and secret or unreported transactions.

Chinese tourists are also notorious for purchasing gold abroad and bringing it back home and in 2009, gold hoarding was publicly encouraged by the Chinese government. It is not known how much gold is surreptitiously moved into the country, but even banks and some jewelry brokers are not required to report purchases. The Chinese Central Bank is also widely believed to have been making gold purchases via proxy banks to obscure who is behind the transactions.The numbers for India are likely under reported as well. Import duties on the metal have led to increased black market trade– the highest in 20 years– and as such, the true amount of gold moving into India is impossible to determine.

China is looking to add the Renminbi to the IMF’s Special Drawing Rights reserve currency, or SDR, later this year and many are expecting the country to abandon the currency’s peg to the U.S. dollar and at least partially back the currency with gold. With the Renminbi’s value left to freely float, it is likely that the country will finally reveal their true gold holdings to provide some stability to the currency’s value. Naturally, that would have a major impact on the price of gold.